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Power and economies of scale are colour-blind

By Dr Adrian Ely, STEPS Centre Member · 18th June, 2014
Mike Wilson 175348
Image: Mike Wilson / Unsplash

How can the green economy avoid reproducing the mistakes of the brown economy? As power relations and economies of scale are 'colour-blind', a truly green (and fair) economy needs to do more than just put a price on nature.

In the run-up to the Rio+20 conference, the emerging ‘green economy’ agenda came under a certain amount of criticism for its downplaying of poverty alleviation and social justice aspects of sustainable development.  A year before the conference, Jim Thomas of the ETC Group wrote:

“What is a global green economy? That, of course, is the multi-trillion dollar question. We can all spell out the problems of our current polluting and unjust economy (thoughtlessly dubbed the “brown economy” by less-than race-sensitive commentators). Yet suspicion is running high that the proposed prescriptions for a “green economy” are more likely to deliver a greenwash economy or the same old, same old “greed” economy. The color-coded theory on offer goes like this: We can move from a brown economy to a green economy by investing more greenbacks in the white heat of technology and PINC (Proactive Investment in Natural Capital) including innovative market mechanisms such as REDD+ (Reducing Emissions through Deforestation and Degredation). Just to round off the color palette, ocean states are further arguing that the green economy also needs to be a blue economy.”

For the purposes of its ‘Green Economy Initiative’, UNEP have defined the green economy as “one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities.”

One component of the green economy attempts to put an appropriate price on externalities such as carbon emissions, biodiversity loss, fresh water use etc.  Whilst a global carbon price is at least theoretically feasible, biodiversity, water and other local ‘planetary boundaries’ have local, regional and global dimensions, making it much more difficult to allocate prices.  In addition, while using market forces as a driver for greener growth fulfils certain environmental objectives (and arguably improves intergenerational equity), on its own, this aspect of the ‘green economy’ does nothing to rebalance the uneven concentrations of wealth and power that are at the heart of many of the critiques.

Proponents of valuation approaches often argue that putting a price on scare resources or the ‘development space’ associated with environmental limits (commoditising them) provides signals that policy makers need in order to factor nature into their decisions.  Signalling is indeed important, but valuation of ‘development space’ or biodiversity and ecosystem services becomes problematic when these are seen as substitutable with other kinds of capital.  Putting a price on ‘nature’ in various forms (for example through financialising biodiversity or carbon offsetting) can create economies of scale that will (on the positive side) incentivise investment, but at the same time motivate powerful interests to appropriate these commodities (or rents associated with them) from less powerful actors who have previously relied up on them for their livelihoods.

Garry Knight Flickr

Technology is also central to the new green economy, and forging greener technological innovation also relies on investment, often at huge scales.  Across the OECD and the BRICS, countries are dedicating significant resources to eco-innovation, especially in the energy sector.  The finance required to build momentum in ‘low carbon’ technological trajectories is also backed by powerful interests that will benefit (through rents) from increasing ‘lock-in’ to these new directions of innovation.  Concentration on photovoltaics (characterised by extensive intellectual property ownership) massively outstrips interest in solar thermal or biomass.  

The simple heart of the matter is that power and economies of scale are colour-blind. If governance is left unaddressed, they can perpetuate current asymmetries in wealth and injustice even despite ‘greener’ forms of growth.”

High quality energy (electricity) such as that generated from photovoltaics is vitally important for ‘Western’ development trajectories, and powerful interests (both at the level of countries and firms) are focussing their efforts on dominating this emerging strategic area, for example through aggressive patenting.  At the same time, these technologies often remain unavailable or inappropriate to the energy needs of many poorer, less powerful communities.  Further, in following these trajectories, less technologically-advanced nations will be forced to pay rents to the holders of the associated intellectual property, perpetuating and exacerbating power asymmetries and dependencies.

In the financialised version of the green economy, just as in the brown economy, economies of scale and power combine to drive investments (and sometimes technologies) that are clearly anathema to the social pillar of sustainable development.  The simple heart of the matter is – power and economies of scale are colour-blind.  If governance is left unaddressed, they can perpetuate current asymmetries in wealth and injustice even despite (environmentally) ‘greener’ forms of growth. 

Does this mean that we give up on this (financialised) version of the green economy?  To some extent yes, but personally I believe that there is a role for the kinds of economic signalling described above.  However, an assumption of substitution, and the disembedding of different forms of natural capital from their social contexts brings obvious downsides.  To overcome these or guard against them, governance and social justice need to remain central to green economy debates, as they have been throughout the history of ‘sustainable development’.  Recognising the importance of these issues, the Green Economy Coalition tries to bring diverse stakeholders together to navigate the complexities – both technical and political – of the green economy, with a view to creating more socially just, as well as environmentally sustainable, futures. 

Dr Adrian Ely,
 STEPS Centre

Image credit: Mike Wilson on Unsplash

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